Having lost about 50% of its value against the US dollar over the past three years, the rand continues to decline. For many it is a negative trend but for local software developers it`s a boon.
"Local software, feature for feature, has always been cheaper than the imported competitive products from the US, UK and Europe. Now the price differential is widening by the day," says Stephen Corrigan, managing director of accounting and payroll software specialist Pastel Software SA, a Softline company.
"The cost of dollar, pound or euro-based software is increasing exponentially. It`s getting to the point where companies could seriously consider taking forward cover on their accounting software package in order to cope with the future cost of upgrades and add-on modules.
"Also, the costs of support, services and upgrades are based on a percentage of the purchase price of the software and to maximise the investment and ensure ongoing business advantage, a company has little choice but to go with the future upgrades and add-ons."
Corrigan points out that when purchasing an accounting software package, a company should bear in mind that it is a living medium upon which the business is heavily reliant for its day-to-day operations. It involves long-term commitment from the business and careful evaluation before a purchasing decision is made.
"It is no easy task to switch the business to another accounting package. It`s just not that simple and it is costly in terms of business disruption, training and so on. Therefore it is critical that a company makes a considered choice, adding up all of the pros and cons, because the commitment period ranges from 10 years to the lifetime of the company. With a dollar-based software there are additional risks in terms of rand devaluation.
"We have to accept that we are conducting business in Africa and that the so-called First World has certain economic and risk viewpoints in that regard. We have to accept that our currency is volatile, as demonstrated by the fact that the rand very recently lost 10% of its value in just two weeks. The upside is that businesses can reduce their future devaluation risk exposures on accounting software by buying local."
A pioneer of the local accounting and software payroll industry, Pastel has for many years exported its products. The devaluing rand is improving the company`s prospects in export markets where it has a large foreign user base with its products sold in 37 countries. "We`re now even more competitive in the UK, US and Europe," says Corrigan. "We shall be taking advantage of the rand phenomenon to extend our share of overseas markets."
Cost is a critical factor in the purchase decision and in response to feedback from a recent survey of its user base, Pastel introduced a rental option for new and existing users of its Pastel Accounting V6, Pastel Premier and Pastel Payroll software programs, allowing customers to make use of the products on a rental basis in return for a monthly payment. Customers can, however, also continue to purchase the software outright -- whichever option best suits their particular circumstances.
"The survey revealed that users increasingly prefer not to make a lump sum payment for a software package. They want a business solution with ongoing support and ancillary services that add value and give peace of mind. The rental model meets these needs."
Corrigan adds that renting software is a trend that is gathering momentum internationally and one that holds significant benefits for both customers and software vendors: "It allows companies to optimise their cashflow management and, as the software does not become a company asset, there is no depreciation process. With the rental model, users will always operate on the latest version and therefore reap the benefits of technology advancements."
Share